Posted on 01/03/2018 12:24:54 PM PST by nickcarraway
U.S. District Judge Thomas Thrash dismissed a lawsuit claiming a man defrauded FedEx by accessing a corporate shipping account offering discounted rates, then charging third parties higher rates to ship items.
A federal judge has dumped claims that FedEx Corp. was defrauded of more than $1.5 million by a man who “highjacked” a corporate account offering discounted shipping rates, then charged third parties inflated rates to pocket a profit.
The ruling lets defendant Dimitar Petlechkov off the hook for FedEx’s claims for fraud, unjust enrichment and tortious interference with business relations, but he still faces criminal charges in Tennessee, where FedEx is headquartered.
According to the civil complaint FedEx filed in Georgia’s Northern District, Petlechkov gained access to a “dormant” account and had it linked to General Dynamics Corp., which maintains hundreds of FedEx corporate accounts offering “significantly lower” shipping rates than those charged to FedEx’s regular customers.
Between 2009 and 2014 Petlechkov, a Bulgarian national, ran an operation where businesses paid him as a third-party shipper, “repeating this scam thousands of times.”
According to court filings, Petlechkov maintained the account under then-name GEN/DSP and used a UPS Store near his house as his billing address.
An example cited in the complaint involves a business Petlechkov recruited through an online business forum. The company sent numerous parcels via FedEx, then was billed by Petlechkov, who paid FedEx with a personal credit card. One such shipment carried a charge of $12.74, but FedEx actually charged Petlechkov $8.36, netting him a $4.38 profit.
The scheme was only uncovered when Petlechkov called FedEx with a complaint. FedEx then contacted General Dynamics, and the account was eventually canceled.
In 2015, Smith Currie & Hancock partner Garrett Miller sued Petlechkov on FedEx’s behalf. The lawsuit included documentation showing the shipper lost $1.5 million in “ill-gotten proceeds.”
Petlechkov’s lawyers, Ichter Davis partners Daniel Davis and Cary Ichter, moved for summary judgment, arguing among other things that FedEx failed to safeguard its own interests by accepting Petlechkov’s claims that he was a General Dynamics vendor and by ignoring potential red flags such as his use of a UPS Store mailbox.
On Dec. 18, Thrash agreed, writing that all of the claims were barred.
Regarding the fraud allegations, Thrash wrote that FedEx failed to prove it placed “justifiable reliance” on Petlechkov’s claims.
FedEx “has provided no evidence that it performed any type of due diligence to verify the accuracy of [Petlechkov’s] representations, as Georgia law requires,” he said. “Instead, the plaintiff blindly relied upon [Petlechkov’s] representation that he was associated with General Dynamics and linked him to General Dynamics’ account.”
The tortious interference with business relations must also fail, Thrash wrote, because FedEx “fails to establish that [Petlechkov] induced a third-party to either not enter into or continue a business relationship” with the shipper’s customers.
While FedEx argued Petlechkov took its customers away by giving them discounted shipping rates they were not entitled to, those customers “did not end their business relationship” with FedEx, which admitted those customers still use FedEx, Thrash said.
The unjust enrichment claim also failed, he wrote, because a “plaintiff is not entitled to recovery for unjust enrichment unless it conferred the benefits provided with the expectation that the defendant would be responsible for the cost.”
FedEx has no expectation that Petlechkov was going to pay for the discounts, he said, which are a benefit it provides to customers “based on their shipping volume.”
In November, Petlechkov was indicted in Tennessee on 20 counts of fraud. He’s currently free on $15,000 bond, according to court documents.
Davis said he could not discuss the civil matter because of the pending criminal charges.
“I do believe Judge Thrash’s decision was well-reasoned and in accord with applicable law,” he said.
Davis said he was comfortable the ruling would survive any potential challenge, although no appeal or similar motion has been filed.
“We haven’t spoken to opposing counsel, but I thought the case meritless from the inception,” he said. “We raised a variety of defenses, some of which were not even addressed in the order.”
Miller declined to discuss the case, and FedEx Senior Counsel Thomas W. Murrey Jr. did not respond to a request for comment.
From one point of view, he was merely an aggregator for FedEx.
From another, FedEx was using its market power to extract extra fees from small customers.
Interesting...
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